Issue link: https://cp.revolio.com/i/886554
6 | THE DATA CENTER JOURNAL www.datacenterjournal.com more attributable to the technical side than the financial side. Wagner notes, "Unless you have a particular type of skin in the game, this flat IT spending is the sign of a positive transition, not of budget stag- nation. One question we ask of the IT leaders taking our survey is whether their budget is sufficient. Almost half (48%) said it was adequate or more than adequate to meet the demands placed on them by the business. is number doesn't seem like a lot, but it's the highest we've recorded in recent years." He believes the main factor is the technology transition that's taking place, with 67% of survey respon- dents saying they were boosting their spending on cloud-based applications. "Cloud applications replacing on- premises applications is the biggest (but not only) driver of the efficiency that we're tracking," he said. ON THE EMPLOYEE SIDE If companies are therefore getting more IT for less money, particularly if it involves outsourcing through the cloud, how does it affect employees? Two important measures in this re- gard are salaries and hiring. Computer Economics data for IT salaries comes out later in the year, but Wagner ex- pects to see a slight uptick across the industry, similar to the 2.8% increase of last year. at number indicates no overall rush to hire, since greater de- mand generally means higher prices. e data tends to confirm this observation; Wagner notes that IT headcounts are reasonably stable because, like with spending, compa- nies can also do more with less staff. "What's happening is that as organiza- tions shed infrastructure by adopting the cloud and SaaS, they're swapping out traditional roles that support infrastructure for roles that sup- port the business," he said. "ey're also eliminating the need for a lot of support personnel by implement- ing automation and AI. We're calling it a transition from 'blue-collar IT' to 'white-collar IT.'" In other words, employees with experience beyond the mechanics of IT—project manage- ment, analysis and so on—will tend to be of greater value than those with just hands-on experience at the equip- ment level. Companies will therefore tend to retain or hire more of these employees. With only about half of Com- puter Economics survey respondents indicating they plan to hire more staff, competition for talent in the IT mar- ket as a whole is lacking. Naturally, though, some specializations are hot- ter than others, but Wagner said that "nothing about the current headcount numbers looks like major growth in salary or staff size." Steady headcounts don't neces- sarily contradict a market undergo- ing major changes. IT, for instance, involves both new and legacy tech- nologies. Companies, therefore, must generally maintain some staff for the older technologies while leaving room for staff that can handle the newer ones. Periods of fast change may lead many to wait for things to settle down before they make drastic alterations in their hiring. Time will tell whether the transition to the cloud will neces- sitate such alterations or whether the flatness will continue. Wagner sum- marizes his view as follows: "e most important thing about this technology transformation is that right now, at least, it isn't reducing total head count at IT departments, but it is changing the roles they need." THE HERO OF THE STORY Because companies can do more with less by increasingly relying on the cloud, flat IT budgets are unsurpris- ing, particularly in light of some of the Computer Economics survey results. Certainly, though, the transition has been neither total nor instantaneous, as steady IT headcounts tend to indicate. Also, despite rumors that the on-premises data center is headed for extinction, the trend is more toward smaller data centers than toward no data center at all. In some industries, in-house IT is a necessity, oen for regulatory reasons. Wagner said the available data in- dicates a steady number of company- operated data centers at the median, but they're shrinking in size. "We're seeing fewer physical servers (though more use of virtualization), decreased spending on floor space and electricity (though, again, that might be due to economic conditions, fuel costs and rent, for example), and lower spending per data center." Moreover, he believes that even if companies move (almost) entirely to the cloud, many will still maintain data centers for mission- critical tasks. So, despite doubts about se- curity, cost and other concerns, the data points to the cloud as the hero of the story. By reducing operational costs per user, the cloud and related ...employees with experience beyond the mechanics of IT—project management, analysis and so on—will tend to be of greater value than those with just hands-on experience at the equipment level. Companies will therefore tend to retain or hire more of these employees.